A pilot program designed to help lenders provide more mortgages to Wisconsin's largely undocumented immigrant population will launch this month.

The Wisconsin Housing & Economic Development Authority, Madison, will join with mortgage insurer MGIC Corp., Milwaukee, in supporting the efforts of four Wisconsin banks. They are seeking to serve borrowers consisting mostly of recently arrived Hispanics who may not be U.S. citizens and lack valid Social Security numbers.

The program will allow participating banks to broaden their markets by writing loans that otherwise would not meet conventional underwriting and mortgage insurance standards.

The program will launch by the end of April. WHEDA officials on March 31 met with more than 50 mortgage lenders and representatives of nonprofit organizations at the United Community Center, Milwaukee, to discuss the program.

WHEDA's pilot program arrives none to soon for the city's burgeoning Hispanic community, said Ricardo Diaz, United Community Center's executive director. An estimated 100,000 Hispanics live in Milwaukee and at least 10 percent are undocumented, said Diaz. WHEDA's loan program will enable more of them to "participate in the American dream of home ownership," he said.

"This is a hard-working community that represents significant purchasing power," said Diaz. "This is very smart on the governor's part."

WHEDA is the first quasi-government agency in the United States to act as the gateway to the secondary market for "ITIN loans," referring to individual tax identification numbers, said sources familiar with the program.

New credit measures

Loans in the new program qualify borrowers by using nontraditional measures of credit, such as rent receipts and utility bills, rather than Social Security numbers. The loans will be structured as WHEDA loans and sold by the agency to the secondary market. Lenders will earn loan origination fees in amounts yet to be determined, sources said.

WHEDA officials declined comment, saying the program is still in the formation stage. A spokesman for MGIC, which is participating with fellow mortgage insurer United Guaranty Residential Insurance Co., Greensboro, N.C., also declined to offer details.

Involvement by private insurers like MGIC is critical to the program's acceptance by the secondary market, said lenders. Borrowers who never before qualified for mortgage loans may be able to purchase homes through the new WHEDA program, said Don Cohen, North Shore Bank's vice president of community lending.

"This isn't an underserved market, this is a never-has-been-served market," said Cohen.

North Shore Bank in mid-February launched its own similar loan program and has 30 loans in process worth an estimated $2 million, said Cohen. North Shore expects to average $1 million per month in loans, he said.

Mitchell Bank has had a similar program in place since 2001, said chairman James Maloney. The bank now holds roughly $2 million worth of non-standard loans on its books, a number it hopes to raise to $5 million within 18 months, he said.

Guaranty Bank began targeting Hispanic residents in 2001 through its "Walk to Worship" program, a partnership with south side churches to enable residents to purchase neighborhood homes, said Del Januchowski, Guaranty's vice president heading the program. Guaranty hopes the WHEDA program will open a whole new section of the Hispanic community to its services, said bank president Gerald Levy.

"The (Hispanic) market is exploding and we have lots of initiatives planned," Levy said.